Friday, April 13, 2018

Cloud Computing: The Pentagon Is Going To Award a Contract Worth Up to $10 Billion, Amazon Wants It, So Does Google (AMZN, GOOG)

So do Microsoft, IBM and Oracle.
First up, Axios, April 12:

Pentagon cloud plan favors Amazon, rivals say

As the Pentagon moves
military information systems into the cloud, some industry experts and
executives are questioning the wisdom of awarding the contract to just
one vendor — particularly since that vendor might well be Amazon.

Why it matters: Sure,
Amazon's competitors want a piece of this business. But they're also
raising arguments about whether any single cloud service provider can
meet the Defense Department's unique needs.

What they're saying:
Rivals argue that the Pentagon's draft RFP (request for proposal) shows
a pro-Amazon bent. But none would go on the record to cite specifics.

Concerns with Amazon: Amazon has deep experience in this space — and it has previously won two government cloud contracts, including with the CIA.

But when the Pentagon went looking earlier this year for a vendor to prep its systems for the cloud migration and chose a company that partners with Amazon.com, competitors cried foul, and the Pentagon cut the size of the award drastically.

Oracle's Safra Catz raised concerns about the Pentagon having a preference for Amazon to President Trump last week, according to a report by Bloomberg's Jennifer Jacobs. Trump then reportedly indicated he wanted the process to be fair.

The Trump factor: Trump's got a bone to pick with Amazon, as Axios' Jonathan Swan has reported
(and many White House tweets have documented). Oracle declined to
comment on Bloomberg's report. The White House did not respond for
request to comment.

The stakes are high:

This could be a multi-billion dollar contract that lasts for a decade.

Whichever
vendor (or vendors) wins the award will also get bragging rights that
the Pentagon, with all of its classified and sensitive missions and
data, trusts its system.....

Additionally the new location is (relatively) near CIA headquarters
which is handy as Amazon is becoming quite the little spy contractor....

That contract was the appetizer, worth about $600 million initially.
And from Defense One, April 12:Google is Pursuing the Pentagon’s Giant Cloud Contract Quietly, Fearing An Employee Revolt

Last August, U.S. Defense Secretary James Mattis made a journey to the West Coast and met with Google founder Sergey Brin and CEO
Sundar Pichai. Over a half day of meetings, Google leaders described
the company’s multi-year transition to cloud computing and how it was
helping them develop into a powerhouse for research and development into
artificial intelligence. Brin in particular was eager to showcase how
much Google was learning every day about AI
and cloud implementation, according to one current and one former senior
Defense Department official who spoke on condition of anonymity.

It wasn’t an overt sales pitch, exactly, say the officials. But the
effect of the trip, during which Mattis also met representatives from
Amazon, was transformative. He went west with deep reservations about a
department-wide move to the cloud and returned to Washington, D.C.,
convinced that the U.S. military had to move
much of its data to a commercial cloud provider — not just to manage
files, email, and paperwork but to push mission-critical information to
front-line operators.

In September, Defense Department officials announced that they would be moving onto the cloud in a big way. The Joint Enterprise Defense Infrastructure, or JEDI, program has since morphed into a single contract potentially worth $10 billion over a decade, to be awarded by year’s end.

The competition is still in its early phases, with a request for proposals expected as early as this week....